Squid Options » Ranting http://squidoptions.com Squids, the smartest animal in the ocean Sun, 21 Feb 2010 04:44:19 +0000 http://wordpress.org/?v=2.9.1 en hourly 1 Why Do Websites Ignore Implied Volatility? http://squidoptions.com/2007/06/28/why-do-websites-ignore-implied-volatility/ http://squidoptions.com/2007/06/28/why-do-websites-ignore-implied-volatility/#comments Wed, 27 Jun 2007 16:10:03 +0000 Squid http://squidoptions.com/2007/06/28/why-do-websites-ignore-implied-volatility/
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    • ]]>     volatility_poster.jpg I was Googling , and I came across this description of a bear call spread.    Bear Call Spread. I quote , bear call spreads are “nice low risk, low reward strategies”. Yes, until IV spikes, then the calls you sold as part of the spread rise.

    I don’t disagree with the article. I agree with it except……they leave out any discussion of what happens when IV drops.

    Sure, IV may not be a ‘intro’ options trading subject, but understanding IV is essential to understanding spreads. When you leave out even a mention of how the greeks affect a spread, you are doing traders starting out a disservice.

    How many of us have gotten caught by guessing right on a stock direction, but getting IV wrong and losing money ?

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